Statement by Commissioner for Economic and Monetary Affairs Olli REHN on the endorsement of the "European Semester" by the EU Council

I welcome the endorsement by the Council today of the introduction of the "European Semester" as of January 2011 and I thank the EU Finance Ministers for supporting this ambitious proposal by the European Commission.

This is a major improvement of our economic governance architecture. This cycle of reinforced ex-ante coordination at European level will help us to correct imbalances and prevent deviations in due time, when Member States prepare their national budgets and national reform programs.

In practice, the European Semester will align the processes under the Stability and Growth Pact and the Broad Economic Policy Guidelines. It will cover fiscal discipline, macroeconomic stability and policies to foster growth in line with the Europe 2020 strategy.

The cycle starts in January with a Annual Growth Survey (AGS) by the European Commission, reviewing economic challenges for the EU and the euro area. The AGS will be presented to the European Parliament. Member States will submit their Stability and Convergence Programmes and their National Reform Programmes in April, so that the Commission can assess them simultaneously. Then the Council, based on Commission assessments, could issue country specific policy guidance in June and July.

Now the work must go on with other important reforms to reinforce our economic governance. I note with satisfaction that our views on strengthening the debt criterion of the SGP gather a large consensus too.

I expect the same level of commitment from the Member States on moving to a more rules-based enforcement of the Stability and Growth Pact, including more and more effective incentives and sanctions which will kick in at an earlier stage. Sanctions should be the normal, almost automatic, consequence to be expected by countries in breach of their commitments.

Therefore on 29 September, the Commission will propose a legislative package to reinforce fiscal and macroeconomic surveillance which will include more effective incentives and sanctions.